Terry Bolla is in the market for a new diamond belt. His neighbor, Steven Williams, owns Stone Cold Cutters in downtown Austin, Texas. They are a large gem dealer that does sell some jewelry items made with diamonds (although most of its sales are sales of raw gems to other jewelers). Steven Williams encouraged Terry Bolla to stop by the store on Monday morning to check out his latest line of such accessories. He guaranteed Terry Bolla a “friends and family” discount on any item in stock. Stone Cold Cutters finances a majority of their purchased inventory items through Everybody Has Their Price finance company. This company is owned by Theodore DiBiase and a guy named Virgil.

After a few hours of shopping, Terry purchased the “Million Dollar Belt” with cash. This is the only such belt of its kind. The security agreement between Stone Cold Cutters and Everybody Has Their Price calls for the money loaned to purchase the “Million Dollar Belt” by Stone Cold Cutters to be secured by the belt itself. It also states Everybody Has Their Price must approve the retail sale beforehand. Terry Bolla has no knowledge of such agreement. Stone Cold Cutters then sells the belt without permission from Everybody Has Their Price. Further, instead of paying off the loan, Steven Williams uses the proceeds for rent and utilities.

After discovering the sale occurred without its consent, Everybody Has Their Price sends Bobby Heenen to repossess the “Million Dollar Belt.” Steven Williams informs Bobby that the belt has been sold to Terry Bolla and that they should address ownership issues with him. Which statement is correct?

A) Terry Bolla owns the Million Dollar Belt free and clear of the interest of Everybody Has Their Price because he purchased the belt in good faith and without knowledge of the terms of the security agreement.

B) Terry Bolla because his “leg drop” is a better finishing move than Theodore Dibiase’s “Million Dollar Dream”.

C) Terry Bolla took the belt subject to the security interest of Everybody Has Their Price, because the terms of the security agreement were breached.

D) Terry Bolla took the belt subject to the security interest of Everybody Has Their Price, because the sale did not occur in the ordinary course of the business of Stone Cold Cutters.